Nunn v. Chemical Waste Management, Inc.

The court holds that the sellers of a waste management company breached express warranties to the buyers by conveying a waste disposal facility that was leaking and in violation of the Resource Conservation and Recovery Act (RCRA) and the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA) regulations, but the buyer cannot recover lost profits. The court first holds that the sales agreement's warranties encompass leakage and violations of RCRA and CERCLA. Although neither RCRA nor CERCLA had been enacted at the time of the transaction, the language of the agreement anticipates possible expansions in the scope of the warranties. Moreover, the warranties are not limited to conditions or events about which the sellers had knowledge. The agreement need not be construed against the buyers, who drafted it, since the parties brought equal bargaining power to the negotiation. The court next holds that adequate evidence demonstrates that leakage and RCRA and CERCLA violations did occur in breach of the warranties. On the issue of damages, the court holds that the buyers may recover remediation costs but may not recover lost profits, since the profits were lost by the corporate entity that was conveyed and not by the buyers themselves. The court holds that defendants remain obligated to pay the balance of the purchase price, and remands the case for consideration by the district court of the CERCLA liability of the parties.